Australia’s blockchain industry shrinks by 14% amid shift to AI

Australia’s blockchain industry has fallen 14 per cent this year, but changes to ETF regulations and lower interest rates could still help the recovery, analysts say.

The Australian fintech landscape has seen a significant decline in 2024, with the number of active blockchain firms decreasing by over 10% compared to 2023.

According to KPMG’s “Australian Fintech Landscape 2024” report, the blockchain industry was among the hardest hit, with a 14% decline year-on-year. The number of companies in the sector decreased from 85 last year to 74 currently. However, KPMG states that the country’s blockchain and crypto sector continues to host major players such as Independent Reserve, SwyftX and CoinSpot.

But the crisis is not limited to Australia. On the global stage, the focus has shifted from blockchain technology to AI as investors increasingly direct more capital towards AI to modernize and future-proof their businesses.

However, there is still hope that the SEC’s approval of Bitcoin exchange-traded funds in the US could serve as “the positive catalyst the blockchain space needs.” KPMG notes that recent rate cuts across multiple regions “could free up capital that has been sitting on the sidelines and could potentially be directed back into the sector, as risk-free interest rates could make alternative investments more attractive.”

In terms of the biggest decline, neobanks were hit the hardest, with a 17% decline. KPMG notes that investor sentiment remains cautious, with venture capitalists still cautious about investing not just in fintech but the financial services sector more broadly.